Downsizing in Sydney: Start With the Next Home, Not Just the Sale

For many Sydney homeowners, downsizing begins with a familiar thought: the current home provides more space than is now needed, maintenance takes more time, and daily life may be easier in a more convenient location.

But a successful downsize is not simply a matter of selling a larger home and buying a smaller one.

It is a decision about how you want to live next—where you want to be, which spaces still matter, what you no longer want to maintain, and how the sale and purchase should be coordinated.

The best place to begin is therefore not with the sale campaign. It is with a clear picture of the next home.

Downsizing in Sydney does not always mean giving up space

The word “downsizing” can suggest moving into the smallest possible property. In practice, many people are looking for a home that is more manageable rather than significantly smaller.

Australian housing research has found that downsizing—or “rightsizing”—is often about reducing maintenance, managing indoor and outdoor areas more easily and achieving a financial or lifestyle benefit. The same research found that many people still wanted useful spare rooms for guests, work, children or grandchildren, with three bedrooms remaining a common preference.

That distinction matters.

A two-bedroom apartment may be physically smaller, but it may not work if there is no practical storage, no space for visiting family or no suitable area to work from home.

A well-designed three-bedroom apartment, villa, townhouse or single-level home may provide a better outcome, even if the reduction in floor area is relatively modest.

The question is not:

How small can the next home be?

It is:

Which spaces still contribute to the way we want to live?

Define what the next home should improve

Before looking at properties, it is useful to identify what the move is intended to improve.

That may include:

• reducing garden and building maintenance;

• moving closer to shops, cafés, transport or health services;

• remaining near family, friends and an existing community;

• gaining lift or step-free access;

• improving security or the ability to lock up and travel;

• reducing household running costs;

• releasing capital from the existing home; or

• moving to a location that better suits daily life.

These priorities should be ranked.

For example, staying within the same suburb may be essential for one household, while another may prefer to move closer to children or exchange a larger block for a more walkable village location.

Without a clear hierarchy, it is easy to compare properties that are attractive but do not solve the reasons for moving.

Keep the space that still earns its place

A good Buyer Brief should distinguish between space that is no longer needed and space that remains useful.

Questions worth considering include:

• Is a third bedroom needed for visitors, grandchildren or a study?

• Is secure storage important?

• Will one or two car spaces be required?

• Is private outdoor space still desirable?

• Are pets part of the household?

• Is there enough room to entertain comfortably?

• Would a single-level layout be preferable?

• Is a separate laundry important?

• How much privacy is expected from neighbouring properties?

These questions are more useful than simply deciding on a maximum number of square metres.

Low maintenance should not automatically mean low flexibility.

The property type matters as much as the suburb

Downsizers in Sydney may consider apartments, townhouses, villas, duplexes, semis or smaller freestanding homes.

Each can work well, but each comes with different considerations.

An apartment may offer lift access, security and convenient facilities, but the buyer should also consider strata levies, the capital works fund, building maintenance, lift reliability, parking, visitor access, storage, noise and privacy.

A townhouse or villa may offer more separation and outdoor space, but stairs, strata obligations and maintenance arrangements still need to be understood.

A smaller freestanding home may provide independence and land ownership, but it may not deliver the reduction in maintenance that prompted the move.

The most suitable property type should therefore be determined by the intended lifestyle—not by an assumption that every downsizer should purchase an apartment.

Plan the sale and purchase together

One of the most difficult questions is whether to sell the current home first or secure the next property first.

There is no single correct answer.

Selling first can provide greater certainty about the available budget, but it may create pressure to purchase within a limited period or require temporary accommodation.

Buying first can provide certainty about the next home, but it may involve funding risk, overlapping ownership costs or pressure around the sale of the existing property.

The appropriate approach depends on factors including:

• financial capacity;

• lending arrangements;

• the availability of suitable replacement properties;

• tolerance for temporary accommodation;

• settlement flexibility;

• market conditions in both locations; and

• the importance of avoiding a rushed purchase.

The sale and purchase should be planned together, even where different professionals manage each side.

A selling agent represents the vendor in the sale of the current home. When purchasing the next property, the selling agent for that property represents its vendor. Independent buyer representation can help ensure that the purchase decision remains guided by the buyer’s own priorities and price boundaries.

Smaller does not automatically mean cheaper

In well-connected Sydney suburbs, high-quality, low-maintenance homes can attract strong competition from downsizers, professional couples, investors and families seeking the same combination of location and convenience.

A smaller property may also introduce costs that were not present in the existing home, including strata levies or future capital works.

The financial comparison should therefore consider more than the difference between the sale price and purchase price.

Government guidance recommends allowing for selling-agent fees, transfer duty, legal fees and moving costs. Selling the principal home may also affect Age Pension entitlements, depending on how the proceeds are used and the buyer’s individual circumstances.

The right buying decision should take into account:

• the purchase price;

• transaction costs;

• ongoing strata or maintenance costs;

• likely future capital expenditure;

• the property’s suitability over time; and

• future resale demand.

A lower purchase price does not necessarily represent better value if the property creates another move within a few years.

Future-proof the property without designing life around age

It is sensible to consider how well a property could continue to work over time.

That does not mean approaching the search as though an immediate move into retirement or assisted living is required.

It means considering practical features that are useful at almost any age:

• step-free entry or reliable lift access;

• a main bedroom and bathroom on the same level;

• comfortable access from the car space;

• manageable outdoor areas;

• proximity to transport and everyday services;

• adequate lighting and ventilation;

• a functional bathroom layout; and

• the ability to adapt the property later if required.

These are not “old-age features”. They are characteristics of a well-considered home.

Establish the Buyer Brief before the current home goes to market

A clear downsizer Buyer Brief should cover more than suburbs, bedrooms and budget.

It should identify:

• the reasons for moving;

• preferred and alternative locations;

• essential and optional property features;

• spaces that must be retained;

• maintenance expectations;

• title and strata preferences;

• parking, storage and accessibility requirements;

• the likely purchase budget after transaction costs;

• preferred timing; and

• conditions that would make a property unsuitable.

This framework makes it easier to assess opportunities consistently and reduces the risk of allowing a sale deadline or an attractive presentation to drive the decision.

It also allows the search to begin before the current home is sold, without committing the buyer to purchase first.

Financial and legal advice should be obtained early

Downsizing can affect superannuation, tax, government benefits, finance and estate planning.

Eligible people aged 55 or older may be able to contribute up to $300,000 per person from the sale proceeds of an eligible home into superannuation under the downsizer contribution rules. Eligibility conditions apply, and the strategy will not be appropriate for everyone.

Independent legal and financial advice should therefore be obtained before commitments are made, particularly where the move may affect:

• Age Pension entitlements;

• superannuation;

• debt repayment;

• ownership structures;

• estate planning; or

• the timing and use of sale proceeds.

A buyer’s agent can coordinate the property-buying process, but does not replace appropriately qualified legal, financial, tax or lending advisers.

How MURRAY LEE assists downsizers

MURRAY LEE represents buyers through the search, assessment, negotiation and auction process to exchange of contracts.

For downsizers, this may include:

• developing a clear Buyer Brief;

• searching publicly listed, pre-market and selected off-market opportunities;

• inspecting and comparing suitable properties;

• reviewing market evidence;

• understanding relevant transaction context;

• coordinating independent due diligence;

• negotiating with the selling agent; and

• representing the buyer at auction.

Michael Murray’s background as a former National Sales Director at McGrath, together with his ongoing sales coaching work with real estate agents, provides MURRAY LEE with an informed understanding of how sales campaigns are managed and transactions are progressed.

That experience is applied on the buyer’s side—without pushing the client towards a property simply to complete a transaction.

The right next home should make life easier, not smaller

A well-planned downsize should reduce the parts of home ownership that are no longer wanted while preserving the space, location and independence that still matter.

The goal is not simply to leave a larger home.

It is to move into a property that is easier to live in, better connected and appropriate for the years ahead—without making the decision under unnecessary time pressure.

To discuss your Sydney property requirements, visit the MURRAY LEE Contact page.

This article provides general information only and does not constitute legal, financial, tax, lending, planning or formal valuation advice.